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Elite Commercial REIT posts 2H20 DPU of 2.49 pence, 2.9% higher than IPO forecast

Felicia Tan
Felicia Tan2/1/2021 09:02 AM GMT+08  • 3 min read
Elite Commercial REIT posts 2H20 DPU of 2.49 pence, 2.9% higher than IPO forecast
Payment of the distribution is expected to be made on March 19.
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The manager of Elite Commercial REIT reported distribution per unit of 2.49 pence (4.53 cents) for the 2HFY2020 ended December, some 2.9% higher than its forecast of 2.42 pence.

This brings FY2020 DPU – from the period of Feb 6, 2020, to Dec 31, 2020 – to 4.44 pence, or 2.3% higher than its forecast of 4.34 pence.

Distributable income for 2HFY2020 stood 2.9% higher than forecast at £8.34 million, while FY2020 distributable income was 2.1% higher than forecast at £14.8 million.

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2HFY2020 revenue came in 0.5% lower than forecast at £11.6 million, which led to net property income (NPI) of £11.3 million, 0.6% lower than forecast.

Manager’s fee was higher by 2.6% compared to forecast due to higher than forecasted income available for distribution.

2HFY2020 profit after tax (PAT) stood 182.6% higher than forecast at £19.5 million due to fair value gain on investment properties amounting to £15.9 million.

FY2020 revenue stood slightly lower at 0.1% lower than forecast at £20.96 million while NPI for FY2020 of £20.37 million stood 0.2% lower than forecast.

Overall PAT for FY2020 of £23.4 million was higher by 122.0% compared to forecast due to fair value gain on investment properties.

Finance costs for 2HFY2020 and FY2020 were 7.3% lower than forecast due to the decline in the benchmark rate of three-month GBP Libor.

As at Dec 31, 2020, cash and cash equivalents stood at £19.0 million.

In its outlook statement, the REIT says it will have to navigate a post-Brexit economy in 2021, as well as deal with the Covid-19 virus, where a new variant has emerged.

The UK is currently in its third lockdown with tougher restrictions with the closure of schools and all non-essential businesses and services.

The group says the Department for Work and Pensions (DWP), the primary and uniquely counter-cyclical occupier of its assets, has committed to increase the number of work coaches it employs to 27,000 by March 2021.

The DWP will continue to keep its Jobcentres open despite the lockdown.


SEE: Elite Commercial REIT's UK acquisition: DPU-accretive and almost risk-free

As at Dec 31, 2020, the REIT’s portfolio is 100% occupied.

The group has also received about 99.6% of the three-months of advance rent for the period from Jan 6 to March.

The group says it expects to provide a stable income to investors as over 99.0% of rental income is derived from full repairing and insuring (triple net) leases from the UK Government.

“We are pleased to announce a strong start with our DPU performance exceeding the IPO forecast. This is attributed to the stable cashflows generated by our portfolio amidst economic uncertainty arising from the COVID-19 pandemic and Brexit,” says Shaldine Wang, CEO of the manager.

“Our uniquely counter-cyclical occupier, the DWP, which provides essential social welfare services and infrastructure, has seen its claimant count more than double to 2.7 million in November 2020 and increased utilisation of its services.”

“82.5% of the assets in the REIT's portfolio are used by the DWP to provide key front-of-house services, primarily Jobcentre Plus unemployment services which have increased in importance given the economic impact of Covid-19. We remain positive about the REIT’s ability to continue to generate attractive and recession-proof cashflows, backed by UK Government tenants with high credit quality,” Wang adds.

Payment of the distribution is expected to be made on March 19.

As at 9.02am, units in Elite Commercial REIT are trading flat at 0.64 British pence.

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